The USD/CHF continues its rally in the week, up for the third day in a row, trading at 0.9268 during the New York session at the time of writing. The market sentiment is calm as market participants wait for the Federal Reserve’s last 2021 monetary policy decision.
Market participants seem to have fully priced at least two interest rate hikes, by the US central bank in 2022, with the possibility of three. Further, in the bond purchasing program, investors expect an increase of the reduction of purchases at least by $30 Billion.
In the overnight session, the USD/CHF remained subdued. However, as shown by the hourly chart, the pair bounced off the confluence of the 50, 100, and 200-hourly simple moving averages (SMAs), breaking the December 14 pivot high at 0.9245, peaking around 0.9270, some 30 minutes away of the Federal Reserve, decision.
That said, the bias of the USD/CHF is tilted to the upside and would challenge the 0.9300 figure if the Fed’s hawkish rhetoric remains.
In the meantime, US bond yields are almost flat. The US 10-year Treasury yield sits at 1.446%, unchanged, while the US Dollar Index edges up 0.03%, at 96.60.
Fed evens usually carry much volatility in the markets. At press time, the USD/CHF is trading near the 50% Fibonacci retracement from the November 24 swing high to the November 30 swing low.
That said, to the upside, the first resistance would be the December 7 high at 0.9274, followed by the 61.8% Fibonacci retracement at 0.9291 and then the 78.6% Fibonacci retracement at 0.9326
On the other hand, the key support levels would be the 38.2% Fibonacci retracement at 0.9239, the 50-DMA at 0.9217, and the figure at 0.9200.
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